£80 Million Profits In Third Quarter

9 February 1998

British Airways today announced pre-tax profits of £80 million for the three months to the end of December 1997. That takes the result for the first nine months of the current financial year to £510 million.

Reflecting the excellent progress made by the company`s business efficiency programme - designed to achieve cost-saving and revenue-improving efficiencies worth £1 billion over three years - unit costs were reduced by 1 per cent. The cost efficiency actions in this programme are expected to deliver profit improvements worth more than £200 million in the current year.

Turnover rose 6.9 per cent to £2,016 million, taking the nine month figure to £6,616 million, up 3.2 per cent.

Benefits in the quarter came from lower fuel prices (£39 million) and the profit on the sale of the airline`s Heathrow catering businesses, which will also lead to lower costs in the future.

Productivity improved by 7.1 per cent, even though the company added more than 2,200 jobs to its workforce. Mainline passenger yields - the average price paid - rose by 2.8 per cent in spite of the strength of sterling.

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The strong pound dampened the third quarter results by £42 million and the
nine-month result by £170 million. This was the prime reason behind a decline in profits (down £33 million for the quarter, and £73 million for the nine months).

The third-quarter result was also hit by late engine maintenance charges of £32 million, and the fire at Heathrow`s Terminal 1 on December 12, which caused severe disruption. The airline is preparing a claim to its insurers for the £5 million cost in lost revenue and compensation to passengers.

Also, flights to Lagos have been suspended since May 1997. Negotiations for their resumption continue with the Nigerian authorities.